Circuit breaker car sales are offering mad discounts in Singapore, but here are 3 things buyers should note before taking the plunge

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Updated May 31, 2020
First published May 15, 2020

SINGAPORE

With the COVID-19 pandemic come the circuit breaker (CB) measures, and with the CB has come a horde of online sales and promotions from car dealerships here.

Case in point – Audi’s offering almost S$50k off list price on one of its SUVs.

But there are three things buyers should take note of before signing the dotted line: The deposit, the financial terms of the sale, and
the Certificate of Entitlement (COE). 

Wait, what’s this about crazy car sale season…isn’t everyone at home?

As our widely shared news story reported, car showrooms won’t open until July at the earliest, and that means even if you’ve bought a car you won’t get it delivered until then.

We’re all bored out of our skulls and can’t go out, so many consumers have been swamping delivery services with online purchases, thanks in part to plenty of promotions on the internet. 

It’s the same with cars: The past few weeks have been a silly season for online car promos. 

This past month saw Lexus having a regular sale and an auction sale, Toyota also had both types of sales, and in fact its auction sale is now happening and ends on May 18. It also had a demo car sale on Lazada. Until the end of the CB period, Honda has a name-your-COE promo, while VW and Skoda both have sales running.

1. Okay, what’s this about the deposit?

Most, if not all, of the online car sales happening right now operate like this at heart: You want to buy the car, so you

1. put down a deposit by credit card
2. the sales consultant calls you up to finalise the details, and
3. you sign on it.
4. Deal done, you wait for delivery in Phase 2. Remote delivery is allowed, but you probably won’t get your car yet because most dealers don’t have enough Open COEs on backlog to register a car.

The first thing you should look at is whether or not the deposit is refundable. Taking Audi’s online sale as a case study, it is refundable. Simply put, let’s say you change your mind at stage 2, you get your S$1,000 back. So far, we haven’t found any example of sales so far that don’t allow you to reclaim your deposit, but you can’t assume the T&C’s remain the same for all car dealerships.

2. Okay and what about the financial terms?

Let’s use Audi as an example again, since their T&C’s are clearly spelt out and you don’t even need to register to look at them.

The quoted prices on the audisale.sg site include three condition as mentioned: you’re trading in your old vehicle to it, you’re taking up Audi’s in-house insurance and loan providers/terms.

Now if you want the least hassle, you simply accept that. But if you want to save some extra cash, you’d ideally go shop around first. As with any other purchases, doing the legwork (or click and swipe work anyway) yourself usually pays off with savings.

For example, to get a better value on your current car, you could try selling your cars on the UCars platform – you’ll get a quote from over 230 used car dealers.

For insurance, you could shop around with the different insurance providers that are here, Direct Asia, Budget Direct, Aviva, or FWD, and more.

3. Lastly, why do we need to watch out for the COE?

Under the circuit breaker measures, nobody can deliver cars to you until July earliest. But before a dealer can do that, they need to register the car with a COE first. 

That’s the dealer’s problem, not mine right?

Not quite. As a car buyers, you always need to keep COE prices in mind, even without COVID-19 messing shit up.

Because COEs are bid for twice a month (every first and third Monday-Wednesday), they are subject to price fluctuations twice a month.

In normal times, this wouldn’t be so much of a concern – COEs have not fluctuated tremendously in the past 12 months or so, in fact they’ve been very stable despite the COE quota becoming smaller.

But as you’re tired of hearing by now, we’re in unprecedented times and it’s even more difficult to predict what’s going to happen. 

We said as much in our COE analysis story in April, and while that was written before the lockdown was extended until June 1, 2020, it also means more time for dealers to score orders. But they can’t fulfill them until after June 1, and in fact we don’t even know when exactly: the LTA hasn’t even announced when COE bidding will resume, exactly.  

Dealers might have a stock of Open Cat COEs (Cat E) to fill some orders readily, but they won’t be many. Meanwhile if, to bid for a COE in your name the dealer has to actually have a signed agreement with you for a car purchase. 

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With two whole months and crazy promos going on, that means a big backlog, and possibly, a COE price spike in June. 

In fact, Honda’s sale is predicated on the idea of letting customers predict the COE, which is pretty clever since it highlights the COE mechanism quite clearly to the buyer – that’s pretty much it saying, “Look we have no idea how COEs will pan out. Why don’t you give it a guess?”

What should I look out for, specifically?

Read the fine print with regards to COEs, because with promotions and discounts come more T&Cs of course.

What you should ask is:

1. At what COE price level is the total car package price (car + COE price) stated?

2. If the COE price goes up beyond the above level, do you have to pay extra?

In other words, you have to make sure your discount is really a discount, because it could be eventually offset by a COE price jump.

How can I get the best deal, then?

If you’re able to, get a guaranteed COE package.

That usually costs a little more, but what it means is that you’re guaranteed to get a car at the price you paid. For a BMW from Performance Motors Limited, it’s a S$5,000 premium, while at Mazda Eurokars it’s S$3,000, for example. Another example, the Lexus Assurance package (a S$1k top up), includes a guaranteed COE as part of its benefits.

A non-guaranteed COE package means the dealer will try to get a COE for you at the total package price agreed on (usually for six bids) but if that doesn’t go through, both parties get to walk away from the deal.

Either that, or you’ll have to top-up the difference to clinch that COE.

And going back to the deposit – if your deposit is the fully refundable kind, you can simply opt not to top-up and walk away from the deal altogether, deposit in hand.

What is going to happen when car dealerships reopen and deliveries begin? 

Again, we don’t know. No, we really don’t, if we did we’d make tonnes of cash out of COE prediction and not be motoring writers. 

But seriously, it doesn’t help that the Land Transport Authority (LTA) hasn’t said how the COEs from April and May are going to be re-distributed. Our guess is, it’ll be divided up amongst the remaining months of the year,  to minimise fluctuations, and also because low COE prices are not a good outcome for the health of the collection box. 

And on the other side of the fence, car dealerships are run by people who know which side their bread is buttered on, and they certainly don’t want COE prices to go up, nor have to call up customers with the dreaded request to top up their bid. 

As ever, a jump in COE prices would mean slimmer margins for dealers, while a slump would indicate that sales across the industry have been dismal, in spite of the effort to shift them online. Either way, the motor traders would be screwed. Pandemic or not, some things never seem to change.

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